LTVplus, an outsourcing company for world-class customer service agents, has recently launched its new Recover Payments solution and platform, a service designed to recover lost revenue from failed payments.
The subscription industry is expected to generate as much as $275 million in revenue by the end of 2022, according to Juniper Research, and close to $1 trillion by 2026, according to The Business Research Company. As subscription-based businesses start to dominate the e-commerce space, the need for effective customer retention strategies is becoming stronger.
Recurring payments mean that your customers are committed to your product/service, and you need to provide them with the best experience possible in order to nurture your relationships with them.
LTVplus’ Recover Payments was built around the concept that it’s important to keep existing clients aside from continuously acquiring new ones. In fact, it’s more profitable in the long run:
- The success rate of selling to existing clients is around 60-70%, but only 5-20% for new ones.
- The cost of acquiring a new customer can be five times higher than retaining an existing one.
However, even the best retention strategy cannot protect you from involuntary churn — which is when a business loses a customer who did not intend to cancel their subscription. Failed payments are the bane of subscription businesses — and this happens even to the most popular subscription providers like SoapBox and Custify.
When the payment method saved in the store’s system isn’t charged when it was supposed to, your business just lost revenue right there and then.
Reasons Why Failed Payments Happen
Most businesses have no idea just how much revenue they are losing because of failed payments. The answer might surprise you.
Software as a Service companies lose around 9% of their monthly recurring revenue due to failed payments. Additionally, research shows that 60% of businesses have lost a customer due to a failed transaction.
So why do failed payments happen? Some of the most common reasons include:
- Credit card is at a maximum spending limit
- Credit card or payment method has insufficient funds
- Card has expired
- The system has detected fraudulent activity
- Human error — the card number might have been typed incorrectly
One similarity among the reasons listed above is how they are all involuntary. The online users didn’t mean for these issues to happen — they did not mean to incur failed payments. Therefore, the possibility of getting back that lost revenue is pretty high — you just need to know how.
How Can Subscription Businesses Recover Lost Revenue?
When a payment fails and does not go through, it’s not a lost cause — yet. There are many ways to recover the revenue from failed payments and involuntary churn. Here are a few strategies that businesses can explore to start winning customers back:
1. Give your customers reasons to come back.
Sometimes, customers just need a soft nudge. Win them back with creative content and incentives such as discounts, upgrades, or bundles. Try to decipher what works best for your audience so you can offer something that they cannot refuse.
2. Set up a dunning email sequence and software.
To be completely honest, dunning emails do not have a high success rate — 85% of customers do not respond to these emails. However, it’s still necessary to do your part as a business owner and remind your customers that their payments have failed before canceling their subscriptions.
3. Craft a win-back campaign using email, SMS, or both.
A win-back campaign is essentially an automated sequence designed to reach out to lapsed customers in the hopes of bringing them back. Interestingly, the average open rate for win-back emails is above 29%. When crafting your sequence, you can offer incentives, promote high-value content, and even get deep and personal with a video message.
How Does the Recover Payments Solution and Platform Work?
There are two major aspects to Recover Payments: The human touch and the digital touch.
The Human Touch
Recover Payments helps you handle failed payment recovery by outsourcing highly skilled and experienced Payment Recovery Specialists. Here’s a quick list of what these Specialists can help you with:
- Executing dunning emails (if you don’t have an existing dunning sequence yet)
- Making sure that all invoices are paid
- Conducting outbound payment recovery phone campaigns to complement efforts in other channels
- Handling disputes and chargebacks
- Collecting and analyzing customer feedback
- Uncovering possible reasons for customer churn
The truth is, most businesses already have a dunning sequence activated. However, it lacks a human touch — and this is what Recover Payments offers. It doesn’t aim to compete with existing dunning efforts, but it aims to complement the dunning sequence with personal follow-ups.
The Digital Touch
The Recovery Payments app removes the manual work of tracking contacts and progress. This app supports the Payment Recovery Specialists as they follow the cadence and conduct the strategies to recover revenue.
Here’s what businesses can do with the app:
- View the agents’ productivity and time spent on recovering revenue
- Bird’s eye view of the number of contacts reached out to and their current status
- Access and analyze real-time data
- View recovery rates
- Sync with your payment platform for smooth transactions when payment is recovered
- Create and execute a payment recovery cadence
Looking for more ways to grow your brand? Discover the latest trends on how subscription businesses can expand by attending SubSummit!